The car­maker said on Tues­day the new­com­pany, which has yet to be named, will develop ad­vanced driver as­sis­tance sys­tems and au­ton­o­mous driv­ing sys­tems. It will be­gin op­er­a­tions in Gothen­burg, Swe­den, early next year.

The sys­tems will be used by Volvo and of­fered for sale to other au­tomak­ers. Volvo andAu­to­liv will split the prof­its fromthose sales. The com­pany plans to of­fer driver as­sis­tance sys­tems by 2019 and au­ton­o­mous driv­ing sys­tems by 2021.

“This new­com­pany is a recog­ni­tion of the fact that au­tonomous­driv­ing is the next step to trans­form­road safety,” Au­to­livCEOJan Carl­son said in a state­ment.

Karl Brauer, se­nior an­a­lyst forKel­ley Blue Book, said the part­ner­ship­makes a lot of sense. Volvo has someof the­most ad­vanced driver as­sis­tance sys­tems on the­mar­ket, whileAu­to­liv has ad­vanced sen­sor tech­nol­ogy. Volvo also has Chi­nese fi­nan­cial back­ing, and China is ex­pected to be a top­mar­ket for self-driv­ing tech­nol­ogy be­cause of its ur­ban den­sity.

“This is a pow­er­ful com­bi­na­tion of au­to­mo­tive en­ti­ties, and these types of al­liances are needed to have a fight­ing chance in this in­creas­ingly fre­netic race for the au­ton­o­mous car,” Brauer said.

The al­liance is one of many an­nounced re­cently in the self-driv­ing sphere. Last month, Volvo Cars an­nounced it­would team up with ride-shar­ing com­pany Uber to develop nextgen­er­a­tion driver­less cars in a $300 mil­lion project.